From Landlord to Short-Let Host: How London Property Owners Make the Switch

Curated Property Journal · Market Insight · London

From Landlord to Short-Let Host: How London Property Owners Make the Switch

Section 24, the abolition of no-fault evictions, and tightening EPC requirements have changed the calculation for London landlords. Here is what switching to short-let actually involves — and what the numbers look like when you do it properly.

CURATED PROPERTY JOURNAL · MARKET INSIGHT · LONDON · 10 MIN READ

Key Findings

• A hybrid short-let and mid-term model can generate 40–80% more gross income than a traditional AST on the same London property
• Section 24 does not apply to short-let income — mortgage interest may be deductible as a business operating cost in a way it no longer is for residential landlords
• London’s 90-day rule limits short-lets to 90 nights per year without planning permission — a hybrid model uses the remaining months for mid-term corporate lets
• The switch requires mortgage consent, lease review, specialist insurance, and property preparation — typically a 6–10 week process
• Short-let agreements are licences, not tenancies — the complications of the Renters’ Rights Act do not apply
• Professional management handles guest communications, cleaning, dynamic pricing and maintenance — the operational burden need not fall on the owner

Why London Landlords Are Reassessing

Three legislative and regulatory shifts have materially altered the economics of traditional residential letting in London since 2020. Taken together, they have prompted a significant number of landlords to ask whether a different model might serve them better.

Tax Section 24 — The Finance Cost Restriction Since April 2020, residential landlords can no longer deduct mortgage interest from rental income before calculating tax. Instead, they receive only a 20% basic-rate tax credit. For higher and additional rate taxpayers with leveraged properties, this has turned profitable portfolios into loss-making ones. Short-let income is not subject to Section 24 — it is assessed differently and mortgage interest may be deductible in full as a business expense.

Legislation The Renters’ Rights Act — Section 21 Abolished The Renters’ Rights Act 2024 abolished Section 21 no-fault eviction notices for AST landlords. Regaining possession of a tenanted property now requires a formal court process under one of the specified Section 8 grounds. This has substantially increased the risk and cost of removing non-paying or non-compliant tenants. Short-let agreements are licences, not assured shorthold tenancies — the Renters’ Rights Act does not apply.

Energy EPC Requirements — Tightening Standards Current regulations require residential rental properties to hold an EPC rating of at least E. Proposed reforms would raise this to C by 2028, requiring significant capital investment in older properties — particularly pre-war London stock. Short-let properties are not subject to the same EPC requirements as properties let on ASTs of four months or more, removing a potentially significant compliance cost.

“The question used to be ‘is short-letting better than a traditional tenancy?’ That question has been answered by the legislation. The question now is how to make the switch properly.”

The Income Comparison: Same Property, Two Models

The table below compares a typical two-bedroom property in prime central London (SW1, SW3, or equivalent) across three letting models. The income figures are indicative ranges based on current market data — actual results vary by property, location, management quality, and occupancy achieved.

Factor	Traditional AST	Hybrid Short-Let + Mid-Term
Gross annual income (2-bed, central London)	£36,000–£44,000	£52,000–£72,000
Section 24 finance cost restriction	Yes — mortgage interest not deductible	Not applicable to short-let income
Tenant possession risk	Yes — formal court process required (S.21 abolished)	None — licence agreement, not a tenancy
EPC requirement	E now; C proposed by 2028	Not required for short-lets under 4 months
Primary regulatory constraint	Renters’ Rights Act 2024	90-day short-let rule (London)
Management intensity	Low (1–2 interactions per year)	Medium with professional management; high if self-managed

Important note The tax treatment of short-let income is complex and depends on individual circumstances, including the number of nights let, whether the property qualifies as a Furnished Holiday Let, and your overall tax position. Independent advice from a property tax specialist is essential before switching. These figures do not constitute financial advice.

The 90-Day Rule: What It Means in Practice

The Deregulation Act 2015 introduced a limit of 90 days per calendar year for short-term lettings in London without planning permission. This is the most significant regulatory constraint for London short-let operators and the one most frequently misunderstood.

The 90-day limit applies to each property per calendar year and covers nights let as short-term accommodation (typically under 90 consecutive nights per booking). It does not apply to mid-term lets of 90+ consecutive nights — a critical distinction that makes the hybrid model possible.

A well-structured hybrid model uses the 90-day short-let allowance for peak demand periods (May through September, plus select event weeks in other months) and the remaining calendar months for corporate mid-term lets of one to six months. This produces a full-year income profile rather than a seasonal one — and the mid-term portion sits entirely outside the 90-day constraint.

2×

Revenue vs Traditional AST

Achievable on well-managed prime central London properties

90

Day Annual Short-Let Limit

Under the Deregulation Act 2015 — without planning permission

S.24

Finance Cost Restriction

Applies to AST landlords — not to short-let operators

Making the Switch: A Step-by-Step Guide

For a property currently let on an AST, or a property between tenancies, the switch to short-let typically takes six to ten weeks if approached in order. The steps below cover the key checks and actions required before a first booking can be taken.

1

Check First Mortgage Consent Most standard buy-to-let mortgages prohibit short-term letting. Review your mortgage conditions before anything else — operating a short-let without consent is a breach of your mortgage terms and can trigger repayment demands. If your current lender does not permit short-lets, you will need to remortgage to a specialist short-let or holiday-let mortgage product, or operate the property unencumbered. Lenders vary significantly on terms; a specialist mortgage broker can identify suitable products quickly. Legal — Must Do First

2

Check First Lease Review and Freeholder Consent If the property is leasehold — which covers the majority of London flats — your lease will almost certainly contain restrictions on sub-letting and may specifically prohibit letting periods of less than six or twelve months. Check the relevant clauses and, where required, obtain written consent from the freeholder or managing agent. Some freeholders will grant consent subject to conditions; others will not. This is a non-negotiable check for leasehold properties. Legal — Check Before Proceeding

3

Before Launch Specialist Short-Let Insurance Standard landlord insurance does not cover short-let activity. Buildings cover may be voided by a single short-let stay. You need a specialist short-let or holiday-home insurance policy that covers guest liability, accidental damage, theft by guests, and loss of rental income. Several specialist providers operate in the UK market; premiums vary by property value, location and level of cover selected. Do not take a first booking without the right insurance in place. Legal — Before First Booking

4

Setup Phase Property Preparation and Furnishing Short-let guests expect furnished properties to a materially higher standard than most AST tenants receive. A professional short-let property needs quality beds with hotel-grade linen sets, a fully equipped kitchen, reliable fast Wi-Fi, a smart lock for self check-in, and a welcome manual. Photography is not a cost to cut — professional images determine click-through rates and first impressions on booking platforms. Budget £2,000–£5,000 for a property that is not currently furnished to short-let standard. Setup Phase

5

Setup Phase Platform Listings and Pricing Strategy The major short-let platforms — Airbnb, Booking.com, Vrbo — each attract different guest profiles and have different commission structures. A well-written listing with a strong title, accurate description, and clear house rules is the difference between consistent high-quality bookings and problematic ones. Pricing should be dynamic rather than static — tools such as Wheelhouse monitor real-time demand signals and competitor availability to adjust nightly rates, capturing event premiums and filling shoulder-season gaps that static pricing leaves on the table. Setup Phase

6

Ongoing Decision Management: Self-Manage or Professional? Self-management is viable for owners who live close to the property, have time to respond to guest enquiries within an hour, can coordinate cleaning between back-to-back stays, and are comfortable handling maintenance at short notice. For most London landlords, professional management is the more practical model. Full-service management — covering guest communications, cleaning coordination, dynamic pricing, maintenance and review management — typically costs 18–25% of gross revenue. The best operators more than recover this in higher occupancy and better average rates. Ongoing

The Tax Position

The tax treatment of short-let income differs from that of residential letting income in several important respects, and the differences generally favour the short-let operator — but the rules are not straightforward.

For a property to qualify as a Furnished Holiday Let (FHL) — the classification that historically offered the most favourable tax treatment, including full mortgage interest deductibility and access to business asset reliefs — it must be available for letting for at least 210 days per year and actually let on a commercial basis for at least 105 days. London properties operating under the 90-day rule will not meet the 105-day commercial letting threshold for FHL status. This means short-let income in London is typically assessed as miscellaneous income or as trading income, depending on the level of services provided.

Even outside FHL status, mortgage interest may be deductible in full as a business operating expense in a way it is not under Section 24 for residential lets. This is one of the most significant financial arguments for the switch for leveraged property owners — but it requires individual tax advice to quantify correctly.

Tax advice required The tax position on short-let income is complex and has been subject to recent change, including the abolition of FHL status from April 2025. Always obtain advice from a property tax specialist before switching, and review your position if you have been operating under previous FHL assumptions. Curated Property can refer owners to specialist tax advisers with current knowledge of the short-let landscape.

Frequently Asked Questions: Switching from Landlord to Short-Let in London

Can I switch from a traditional AST tenancy to a short-let in London?

Yes, subject to several checks. You need mortgage consent (most standard buy-to-let mortgages prohibit short-lets), lease consent if the property is leasehold, specialist short-let insurance, and the property furnished and prepared to short-let standard. If your current tenant is still in situ, the AST must end before you can operate as a short-let. The switch typically takes six to ten weeks from start to first booking if approached in order.

What is the 90-day rule for short-lets in London?

Under the Deregulation Act 2015, London properties may be let as short-term accommodation for up to 90 nights per calendar year without requiring planning permission. Nights let beyond that limit require a change of use planning application from the local authority. The 90-day rule applies only to short stays (typically under 90 consecutive nights per booking). Mid-term lets of 90 consecutive nights or more are not caught by the rule, which is why the hybrid short-let plus mid-term model is widely used by professional operators in London.

Does Section 24 apply to short-let income?

Section 24 of the Finance Act 2015 — the mortgage finance cost restriction — applies specifically to income from properties let under assured shorthold tenancies. It does not apply in the same way to short-let income, which is assessed as either miscellaneous income or trading income depending on the level of services provided. This means mortgage interest may be deductible in full as a business operating expense for short-let operators — a significant advantage over AST landlords. Individual tax advice is essential to confirm the position for your specific circumstances.

What does professional short-let management cost in London?

Full-service short-let management in London typically costs 18–25% of gross rental income. This covers guest communications and vetting, check-in coordination, cleaning management between stays, dynamic pricing, maintenance coordination, and review management. The best operators more than recover their fee through higher occupancy rates and better average nightly rates than self-managed equivalents achieve. The net income position for a professionally managed property is typically better than a self-managed one despite the management fee.

What is the hybrid short-let model for London landlords?

The hybrid model uses the 90-day annual short-let allowance for peak demand periods — typically May through September, plus selected high-demand event weeks — and the remaining months for mid-term corporate lets of one to six months. Mid-term lets are not subject to the 90-day rule, so the hybrid model allows year-round income without planning permission. Short-let rates during peak season are significantly higher than AST equivalents, and mid-term corporate lets typically command a premium over standard AST rents for the same property.

Do I need planning permission to short-let my London property?

Not if you stay within the 90-day annual limit. The Deregulation Act 2015 created a permitted development right allowing London residential properties to be used as short-term accommodation for up to 90 nights per calendar year without a change of use application. Exceeding 90 nights requires planning permission for a change of use from C3 (residential) to a sui generis short-term let use. Some London boroughs monitor short-let activity on platforms such as Airbnb and may issue enforcement notices to properties operating beyond the limit.

Ready to make the switch?

Curated Property manages the full transition for London property owners — from the initial checks and property preparation through to bookings, pricing and ongoing guest management. We handle the complexity so you don’t have to.

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